hi, i was wondering if anyone can give me some advice, i have been self employed since 18th april 2011. i sub contract to an industrial door company, i get a price per job. then get a cheque for all my jobs carried out that month. my tax gets deducted before they pay me my cheque. i pay national insurance contribrutions through direct debit. do i need to do a tax return this year?. i pay for my own fuel, tools, van hire, etc etc
Yes - the tax deducted at source does not take into account your personal allowance and also you still have to pay Class 4 National Insurance (at 9%) on any profit above £7225, up to £42,475 and 2% on anything above that. The National Insurance you pay by direct debit is Class 2.
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Never buy black socks from a normal shop. They shaft you every time.
well just worked out before tax i have earned £23,250 since april 2011. so what your saying is that i will actually owe more money when i do my self assessment. sory if you think i been a bit thick but first year self employed. and its all new to me, many thanks
If you are saying that your profit after deducting all you expenses is £23250
You will owe about £4597 in tax, less whatever you has been deducted by your contractor, plus about £1442 class 4 national insurance. That is as at your current position. As there is still two months to go before April 5, you income will probably have increased.
If, after deducting what has been taken out already from tax you owe more than £1000 in tax & class 4 NI, you will also have to make a payment on account for the following year too, equal to what you owe. You would then have to pay half that amount with what you currently owe by 31/01/2013, and the balance (the other half) by 31/07/2013.
This is only a guide, and will vary depending on your circumstances. It may also reduce if you have spent a lot on equipment.
He might not have to pay half again up front - there are rules for that as well. I think if 80% of the tax due has been deducted at source then they don't have to pay up front for the next year. It seems as though all the income is subject to tax before he receives it.
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Never buy black socks from a normal shop. They shaft you every time.
Surely the £4597 is the total of tax and national insurance? So if he's has tax deducted at the 20% rate on the £23,250 he will have paid too much tax?
Here's my calculations (based on no expenses and no further income this year)
23,250 less 7,475 = 15,775 x 20% = 3155 (Income Tax) 23,250 less 7,225 = 16,025 x 9% = 1442 (Class 4 National Insurance) TOTAL = £4597
Deducted at source 23,250 x 20% = 4,650
Therefore he has overpaid £53
Unless I have made some fundamental error which given my tired status is quite probable.
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Never buy black socks from a normal shop. They shaft you every time.
well just worked out before tax i have earned £23,250 since april 2011. so what your saying is that i will actually owe more money when i do my self assessment. sory if you think i been a bit thick but first year self employed. and its all new to me, many thanks
Confirming that you are a subcontractor, if you have earned £23,250 then, assuming no materials have been deducted, the contractor has deducted tax of £4,650.
It is a bit pointless trying to calculate your tax at this point because:-
a. presumably you will have more taxed income to be added;
b. you have not given any idea of the scale of the expenses to be claimed.
Unless I have made some fundamental error which given my tired status is quite probable.
Nope Peasie, the error was mine. I have a little excel calculator to calculate Tax & Ni, which gives the individual and total figures. I bought down the total, as the tax figure, not the actual tax figure
Quite right to that no payment on account may be due, depending on the circumstance.
I agree with Truemanbrown, that it is a bit early to consider what tax will be due, as there are so many unknown variables but as westie31, was unsure I thought I would give an idea of what he might expect.
